So the bailout plan is out, and not too many people are happy about it, except for maybe the guys who get to keep three of their houses and their most precious "overhead."
Paul Krugman says "No Deal."
And there's no quid pro quo here — nothing that gives taxpayers a stake in the upside, nothing that ensures that the money is used to stabilize the system rather than reward the undeserving.
I hope I'm wrong about this. But let me say it again: Treasury needs to explain why this is supposed to work — not try to panic Congress into giving it a blank check. Otherwise, no deal.
Sebastian Mallaby doesn't like it either.
With truly extraordinary speed, opinion has swung behind the radical idea that the government should commit hundreds of billions in taxpayer money to purchasing dud loans from banks that aren't actually insolvent. As recently as a week ago, no public official had even mentioned this option. Now the Treasury, the Fed and congressional leaders are promising its enactment within days. The scheme has gone from invisibility to inevitability in the blink of an eye. This is extremely dangerous.
Robert Reich writing at TPMCafe says:
The public doesn't like a blank check. They think this whole bailout idea is nuts. They see fat cats on Wall Street who have raked in zillions for years, now extorting in effect $2,000 to $5,000 from every American family to make up for their own nonfeasance, malfeasance, greed, and just plain stupidity. Wall Street's request for a blank check comes at the same time most of the public is worried about their jobs and declining wages, and having enough money to pay for gas and food and health insurance, meet their car payments and mortgage payments, and save for their retirement and childrens' college education. And so the public is asking: Why should Wall Street get bailed out by me when I'm getting screwed?
So if you are a member of Congress, you just might be in a position to demand from Wall Street certain conditions in return for the blank check.
John Boehner, speaking on ABC's This Week, thinks homeowners already got bailed out. What?
But we've already dealt with that, when we passed the housing bill last summer. I didn't vote for it because of the $300 billion bailout for scam artists, and speculators, and others around the housing industry. But there are a lot of tools in there to help the Federal Housing Administration deal with the foreclosures problems that's out there. We need to rise above partisan politics…and deal with this as adults.
Barack Obama is sounding like Reich:
Mr. Obama warned that the bailout should not be a “blank check” and called for tighter regulation of the financial industry, suggesting he would support imposing federal capital requirements on investment firms. He also emphasized that the plan would have to include more relief for homeowners and distressed communities, a demand being made by Democrats in Congress.
“Regardless of how we got there,” he said, “we now have a situation where people's jobs, people's savings, people's retirement accounts, their job security, all that is at risk. And so we've got to take some firm and decisive steps.”
And John McCain is sounding like...John McCain:
Mr. McCain has struck a notably populist tone in addressing the crisis, and in the interview, he set a specific limit on compensation for executives at firms that receive federal assistance. “But the major point,” he said, “is that no C.E.O. of any corporation or business that is bailed out by us, that is rescued by American tax dollars, should receive any more than the highest paid person in the federal government.”
--A. Serwer
